July 1 (Bloomberg) -- Prosecutors agreed to release former
International Monetary Fund chief Dominique Strauss-Kahn on his
own recognizance, two people familiar with the matter said.

Strauss-Kahn, accused of a sexual attack on a hotel maid in
New York, will have his bail returned and would still be subject
to travel restrictions while he faces charges, said the people,
who didn’t want to be identified because they aren’t authorized
to speak on the matter.

The Manhattan District Attorney’s office plans to tell a
New York state court judge today that its investigation raised
doubts about the victim’s credibility, said a third person
familiar with the matter. Prosecutors disclosed the information
to Strauss-Kahn’s lawyers, the person said. At that 11:30 a.m.
hearing before New York State Supreme Court Justice Michael
Obus, the bail issue is scheduled to be discussed.

“When the district attorney outlined the charges voted on
by the grand jury, he said the office would continue to
investigate the facts of this case, wherever they lead,” Erin
Duggan, a spokeswoman for Manhattan District Attorney Cyrus
Vance Jr., said in an e-mail today in response to questions
about the handling of the case. “That is exactly what the
office has done.”

‘Certain Disclosures’

“There will be certain disclosures made about the
credibility of the witness,” Benjamin Brafman, Strauss-Kahn’s
lawyer, said yesterday in a phone interview. The hearing
scheduled for today will include a request for “substantial
modifications” to Strauss-Kahn’s bail conditions, Brafman said.
He declined to comment further.

Strauss-Kahn, 62, is awaiting trial on charges of sexually
assaulting and attempting to rape a Manhattan hotel maid on May
14. He pleaded not guilty and is free on bail under security
conditions that include electronic monitoring and an armed
guard.

The former IMF chief is living in a rented townhouse in the
Tribeca section of Manhattan, only blocks from the courthouse.
Since his release from jail on May 20, he has been allowed to
leave home only for legal, medical and religious purposes. He
posted $1 million cash bail and a $5 million bond.

Strauss-Kahn is accused of attacking a housekeeper, a 32-year-old from Guinea, at the Midtown Manhattan Sofitel on May
14, grabbing her breasts and trying to pull down her pantyhose,
prosecutors have said in court papers. The former IMF chief
attempted to rape her and forced her to engage in oral sex,
according to the indictment.

Media Leaks

In a May 25 letter to the Manhattan district attorney
complaining about media leaks in the case, Brafman and co-counsel William Taylor III said that, if they wanted to feed the
media frenzy, they could release information that would
“gravely undermine the credibility” of the woman.

The prosecutor’s office responded in a letter May 26 saying
it was “troubled” by the defense lawyers’ claims they
possessed information that might negatively affect the case and
the woman’s credibility.

“We are aware of no such information,” Manhattan
Assistant District Attorney Joan Illuzzi-Orbon wrote. “If you
really do possess the kind of information that you suggest that
you do, we trust you will forward it immediately.”

Strauss-Kahn was indicted on seven counts, including
attempted rape, sexual abuse, unlawful imprisonment and forcible
touching. If convicted of the top charges, he faces as long as
25 years in prison.

Polls had shown Strauss-Kahn as the potential candidate
with the best chance of beating French President Nicolas Sarkozy
in next May’s general election. Socialist Party hopefuls have
until July 13 to register for their primary, which is scheduled
for October.

The case is People v. Strauss-Kahn, 2526/11, Supreme Court
of the State of New York, New York County (Manhattan).